The Stock Market and Antarctica are About to Part Ways

stock-market-volcanoUs humans are terrible at comprehending the vastness of the geological time scale. To paraphrase Neil Degrasse Tyson from the new series Cosmos, which I highly recommend everyone watches:

“If we change the scale of time such that the Big Bang happened at the beginning of the day on January 1st of a given calendar year, and the end of the day on December 31st of that same year is right now, all of recorded human history (ie. starting with caveman paintings) was over the last 14 seconds, and Jesus Christ was born 5 seconds ago…”

It is fun and useful to employ a metaphor like this so that we are able to even begin to understand the vastness of this time scale, but we can’t truly comprehend it. Not when our average 80-year lifespan is only 0.0000006% of the above imagined year.

The Earth’s Ice Age Cycle

Discovered through the analysis of ice core samples from Antarctica, our planet has been on a rough, 125,000 year cycle of brief periods of warmth followed by long periods of coldness. For a very long time. Here is a graph of the global temperature over the past 425,000 years:


Global Temperature over the Past 420,000 years

The trend is pretty clear when you stand back and look. But again, it is difficult for our little brains to truly comprehend this behavior without the visual assistance. It is just too grand, and we are just too small.

Interesting where on that graph we are sitting right now, isn’t it?

The Stock Market

From what might seem like left field, here is a graph of the S&P 500 (America’s top 500 companies on the stock market) for as far back as I am able to show:


The S&P 500 since 1950

Another interesting picture, isn’t it? Again, look where we are now! What is going to happen next??

My Crystal Ball

I glance at the financial headlines each morning and night. Not for a long time (that might make a person go crazy), but long enough to notice that the people analyzing things so often seem to have trouble comprehending reality. Seemingly similar to our inability to comprehend the geological time scale. One minute someone is reporting how healthy the US economy is, the next minute someone is reporting the Great Correction is upon us. Sometimes it looks like a barn full of headless chickens (the sky is falling??) running around bashing into each other.

Ack! Who to trust? Who to believe??

My guess is this. Feel free to believe me if you want, I would love it if you did, but keep in mind I’m just a dude. One that enjoys sitting in the hot tub with a glass of bourbon while pondering the bigger things in life.

We have fucked with the planet’s environment. There are way too many of us doing way too many bad things to it. It will continue to cycle between hot spells and cold spells, like it always has, but the expected behavior of the above graph dropping next is not going to happen. It is going to rise next. And then once enough of us have died off due to that happening, it will continue it’s hot/cold cycle on a downward trend until hundreds of thousands of years from now (perhaps millions?), it will be back to the cycle it is currently on.

The stock market is going to drop. Drastically and very soon. Just like you would expect from that graph. True, we don’t have the historical data we have with the global temperature to prove it, but we have rich people with control over the dials that can make it happen when they want. And when the stock market drops, rich people get richer. So it is going to happen very soon.

Contrary to traditional thinking, I would try to beat the stock market at this one. Pretend you are one of those rich people getting richer. Buffett is not the only one that can successfully play that game.

How to beat it? If I were a person holding on to assets that are affected proportionately by the stock market, which is virtually everything other than gold and silver, I would do everything to change that. Very soon, if possible.

And then when it drops, I would buy up as much as I could afford.

Check back here when the big drop happens if you are interested to see what I am buying.

Disclaimer: I am in no way attempting to actually correlate the temperature of the planet with the stock market. The time scales are obviously worlds apart. That said, I also wouldn’t say the two aren’t in any way related. Plus, the comparison made for a good story.
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